Little did we know that a few months later the world would face an unparalleled health crisis with major social and economic consequences. Three years on, some of the residual effects of the pandemic remain. This includes changes in consumer spending patterns, and disrupted global shipping and manufacturing bottlenecks, due to, amongst other things, China’s zero-Covid policy. Since the start of 2022, new challenges emerged and pre-pandemic issues gained renewed momentum. Here the most notable is certainly the intensified drive towards limiting emissions and curbing global warming within the broader Economic, Social, and Governance (ESG) context. The achievement of these goals is, however, affected by the war between Russia and Ukraine, which disrupted energy markets and added additional complexities to the global movement away from fossil fuels. Given the explanation above, we have organised this publication around four themes or focus areas. The first, covered in section 3, deals with export focused subsectors that are still negatively affected by some of the residual effects of Covid-19 and other global disruptions. The selection of specific industries to cover here was driven by overall industry contribution to agricultural export value.
The global grain and oilseed market has faced several supply disruptions over the past three seasons. The first was a persisting La Niña, that caused dry conditions in certain key grain and oilseed production regions around the globe, which included South America and the mid-west of the United States. The second factor was numerous trade disruptions which ranged from export issues and sanctions due to the Russia Ukraine war, to export bans - for example, the 2022 wheat export restriction in India - which all added to global price momentum. Thirdly, labour issues and structural changes in palm production, due to the age of the plantations, contributed to the price run in global oilseed prices, specifically. From a demand perspective, record grain and oilseed purchases from China, as swine herds were rebuilt after the devasting 2018 African Swine Fever (ASF) outbreak, combined with increased demand for commodities used as a biofuel feedstock, contributed to the upward price trend. Whilst speculative trade in agricultural commodities added fuel to the proverbial fire fund managers increasingly participated in agricultural, commodity trade due to the bullishness of the markets.
Over the past 12-18 months, livestock and meat prices increased rapidly as the world emerged from the Covid-19 pandemic and its associated lockdowns. Price increases in these markets were so pronounced that analysts dubbed the phenomenon “meatflation”, intended to highlight the large effect that meat price increases played in overall food inflation around the globe. This was driven by both supply and demand factors. On the demand side, as economies opened up, demand from the food service industry increased. This combined with pent-up demand during the pandemic and ensured strong demand for all livestock products. In terms of supply, disease outbreaks, such as the BSE outbreak in Brazil and Avian Influenza outbreaks in Europe and more recently in the USA and Canada, further added to trade disruptions and supply and demand imbalances. High feed costs due to supply disruptions in grain markets also added to constrained supply.
